The marginal rate of substitution is equal to the absolute value of the slope of an indifference curve It is the maximum amount of one good a consumer is willing to give up to obtain an additional unit of another Here, it is the number of days of skiing Janet Bain would be willing to give up to obtain an additional day of horseback riding Notice that the marginal rate of substitution (MRS) declines as she consumes more and more days of horseback riding The maximum amount of one good a consumer would be willing to give up in order to obtain an additional unit of another is called the marginal rate of substitution (MRS), which is equal to the absolute value of the slope of the indifference curve between two points Figure 7.12 "The Marginal Rate of Substitution" shows that as Ms Bain devotes more and more time to horseback riding, the rate at which she is willing to give up days of skiing for additional days of horseback riding—her marginal rate of substitution—diminishes The Utility-Maximizing Solution Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 391